Greece OKs austerity plan, bids to avoid bankruptcy

Tuesday

Nov 13, 2012 at 12:01 AM

Greek lawmakers approved the country's 2013 austerity budget early Monday, an essential step in Greece's efforts to persuade its international creditors to unblock a vital rescue loan installment without which the country will go bankrupt.

Demetris Nellas and Elena Becatoros

ATHENS, Greece — Greek lawmakers approved the country's 2013 austerity budget early Monday, an essential step in Greece's efforts to persuade its international creditors to unblock a vital rescue loan installment without which the country will go bankrupt.

The budget passed by a 167-128 vote in the 300-member Parliament. It came days after a separate bill of deep spending cuts and tax hikes for the next two years squeaked through with a narrow majority following severe disagreements among the three parties in the governing coalition.

Prime Minister Antonis Samaras pledged that the spending cuts will be the last Greeks have to endure.

"Just four days ago, we voted the most sweeping reforms ever in Greece," he said. "The sacrifices (in the earlier bill and the budget) will be the last. Provided, of course, we implement all we have legislated. "

"Greece has done what it was asked to do and now is the time for the creditors to make good on their commitments," he stressed.

Athens says that with the passage of the two bills, the next loan installment, worth (euro) 31.5 billion, should be disbursed. Without it, the government has said it will run out of cash on Friday, when (euro) 5 billion worth of treasury bills mature.

Eurozone finance ministers ended a meeting in Brussels on Monday without agreeing on the next batch of bailout aid for Greece.

Jean-Claude Juncker, the head of the eurogroup, said the finance ministers hoped to reach a final agreement at an extraordinary meeting to be held Nov. 20, which he said would be a continuation of Monday's meeting. However, finance ministers did agree that Greece could have two additional years — until 2022 — to meet its debt reduction target.

Juncker praised the reforms and budget cuts made by Greek authorities, as did Christine Lagarde, the head of the International Monetary Fund, and Olli Rehn, the EU's monetary affairs commissioner.

The officials said Greece has only a few more actions it needs to take before getting the next (euro) 31.5 billion installment of its bailout loan. They did not specify the actions.

In addition, Rehn said Greece would not run out of money Friday, as had been feared, because it would be possible for the country to roll over the debt it owes.

A draft report on Greece's progress from the so-called troika of creditors — the European Central Bank, the European Commission and the International Monetary Fund — recommended giving Athens until 2016 to implement the reforms necessary to restart growth.

Hours before the vote in Greece, 15,000 people converged outside Parliament in a peaceful demonstration. The crowd was far smaller than the 80,000-strong crowd which protested last Wednesday's austerity bill vote. That demonstration degenerated into violent clashes between riot police and hundreds of protesters.

Greece is mired in a deep recession heading into its sixth year, with more than a quarter of Greeks unemployed. Battered by a mountain of debt and a gaping budget deficit, Greece has been relying on international bailout loans from other eurozone countries and the International Monetary Fund since May 2010.